Europe Braces for Trade Hit as Global Commerce Slows

livemint.com:

Europe’s trade relationships are set to suffer as global conflicts and protectionism open a chillier chapter in international commerce, hitting growth on the continent. Trade is now growing at a slower pace than the world economy, marking a fundamental shift away from the trade-centric globalism prevalent since the end of the Cold War, Boston Consulting Group said in a report published this month. The slowdown is due to rising protectionism, including in China, and increased disruptions from conflict, BCG said.

“A characteristic of the new world trade order will be the growing prominence of [regional] trade blocs," BCG said. “The cooler trade climate is part of a reordering of the world trade map." While trade between China and its major rival, the U.S., will be $197 billion lower in absolute terms by 2032 than in 2022, the main winners of this shift will be Southeast Asian nations, whose trade with China is set to skyrocket. European nations, whose rivalry with China is less bitter than the country’s relationship with the U.S., won’t see the same falloff in trade with the East Asian giant, but growth in commerce between the two will slow nonetheless, BCG said.

In the near term, the export-oriented eurozone looks especially vulnerable to a creaking global trade structure, according to Pantheon Macroeconomics, a consulting group. This year, exports from the bloc are set to take a hit from weakening growth in its major trading partners, notably China, Pantheon said in a recent note. In the past 12 months, export growth has plunged, too, it said.